The local real estate market remains one of the 10 hottest markets in the nation, although there appears to be no end in sight for the inventory shortage, according to reports from various industry sources. The market will likely remain very challenging for would-be buyers throughout the summer.
According to www.Realtor.com, the National Association of REALTORS® (NAR) official website, San Diego was the 10th “hottest” real estate market in June with the typical home taking just 37 days to sell. San Diego was one of the five California markets on the list. The Vallejo-Fairfield area in northern California led the list. Nationally there were 11 percent fewer homes on the market in June than during the same month last year, marking 24 consecutive months of year-over-year inventory declines, according to NAR. Nationwide, a typical home was on the market 60 days. In 80 percent of markets there are fewer homes for sale currently than this time last year, NAR said.
Meanwhile, the San Diego County median home price hit $530,000 in May, according to real estate tracker Core-Logic. The new higher number represents an 8.2 percent increase in a year. For all of Southern California, the median home price in May was up 7.1 percent year-over-year, bringing the median to $492,000. The largest increase was in San Bernardino County, at 8.8 percent, to a median price of $310,000. It was followed by San Diego County with the 8.2 percent increase; Riverside County with a 7.9 percent increase for a median of $356,000; Ventura County with a 7.1 percent increase for a median of $553,750; Los Angeles County with a 6.8 percent increase for a median of $560,500; and Orange County with a 6.7 percent increase for a median of $695,000.
High demand from home buyers and a limited supply of homes for sale are the main ingredients in the recipe for rising home prices, according to Zillow. Three factors are driving demand, including millennials are aging into home ownership, the labor market is booming and wages are growing.
Indeed, some economists are wondering about a possible housing bubble since home prices are rising faster than inflation. Since demand is exceeding supply and financing is available, there seems to be nothing right now to prevent prices from continuing their upward trend.
According to the latest Market Pulse Survey from the California Association of REALTORS® (C.A.R.), market conditions remained positive, but some REALTOR® expectations are beginning to decline. While fewer properties sold above asking price, the market remained competitive as multiple offers inched up in May from April.
C.A.R. said the share of homes selling above asking price was down from 38 percent a year ago to 35 percent in May 2017, while the share of properties selling below asking price was unchanged at 34 percent. The remaining 31 percent sold at asking price, up from 27 percent in May 2016.
Also, C.A.R. said 70 percent of properties sold in May received multiple offers, up from 68 percent in May 2016. The share of properties receiving three or more offers in May was 44 percent, compared to 46 percent a year ago.
C.A.R. also said a lack of available inventory continued to be at the top of the list of concerns for REALTORS®, with 41 percent indicating it as their biggest concern. Declining housing affordability and high-interest rates concerned 23 percent of REALTORS®, while inflated home prices-housing bubble was cited by 21 percent of REALTORS®. The economy, lending and financing, and policy and regulations rounded out REALTORS®’ remaining biggest concerns.
Finally, some analysts believe the economy is growing due to improved local labor conditions, rising prices of local stocks and stronger measures of U.S. consumer confidence due to President Trump’s business-friendly policies. Survey company Gallup said consumer spending in the U.S. rose was $103 a day in June, the best performance for the month since 2008. The daily spending in May was $104. Gallup said Americans’ reported daily spending has averaged $100 or more since February — the longest stretch of triple-digit spending averages since 2008. Spending in July is likely to hold at its current level, because in most years over the past decade, Gallup has recorded figures for July that were within $3 of June’s average. The June results were based on more than 15,000 interviews conducted as part of Gallup daily tracking throughout the month. Gallup asks Americans each night to report how much they spent the previous day, excluding spending on normal household bills and major purchases, such as a home or car. The measure gives an indication of discretionary spending.